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No more jaw-jaw, as PRS sues SoundCloud over music streaming

Is the balance of power still tipped towards large tech companies?

Analysis UK performing rights society the PRS* has told its 111,000 members that it is now reluctantly suing SoundCloud after five years of fruitless negotiations, for refusing to properly compensate its members after streaming their works.

“Unfortunately, [SoundCloud] continues to deny it needs a PRS licence for its existing service available in the UK and Europe, meaning it is not remunerating our members when their music is streamed by the SoundCloud platform,” said a emailed message from PRS, as reported by the BBC.

A few years ago, Berlin-based SoundCloud created a neat music widget and its website became a popular showcase for demos and remixes – but two years ago big-money VC investment started to splash in.

Rather than paying the creators, SoundCloud invited creators to pay SoundCloud. Meanwhile, SoundCloud stalled on striking deals with labels and PROs (performing rights organisations).

SoundCloud introduced adverts, and last year, subscriptions were added – so money is definitely coming in. The beef is that it's not very much, and not a penny is reaching UK musicians and songwriters.

The sound recording's copyright and the composition's copyright are two different things. While indie record label body Merlin has licensed SoundCloud in the US, Sony has recently been pulling music because it couldn't reach a deal.

On the composition side, no performing rights society has struck a deal, except where it is compelled to license by law under a compulsory system (e.g., the USA).

"We believe this approach does not serve the best interests of any of the parties involved, in particular the members of the PRS, many of whom are active users of our platform and who rely on it to share their work and communicate with their fanbase," SoundCloud said in a canned response.

Performing rights societies are caught between a rock and a hard place. Under political pressure, the PRS struck a deal with YouTube for the use of music in August 2007, becoming the first PRO to do so. But the deal was so rotten for PRS members, it cost the PRS chief executive his job. Today, YouTube is the 800lb gorilla able to set terms (and consequentially, deals) on terms no Old World record label could ever dream of making.

Describing her YouTube offer, cellist Zoe Keating said: "This is like saying 'no' to a record deal but result[ing] in the label having your songs forever and paying you nothing! YouTube is EVIL."

Not a level playing field

As the saying goes: "In life, you don't get what you deserve, you get what you negotiate," and musicians' ability to negotiate a fair deal is handicapped by weak copyright law. It's really a loophole that allowed fortunes to be made in Silicon Valley.

Rights holders cannot oblige a profiteering tech company to stop using their work effectively, and say: "From now you will have no more Wurzels songs," and have no more Wurzels songs ever appear on the site.

Copyright law instead obliges the musician to notify the service provider of each instance of infringement, which is expensive and difficult. The problem isn't identification of works, it's the unwillingness to implement the identification technology, as internet companies know the loophole favours them.

So in music licensing negotiations, the balance is tipped towards large tech companies. It's a legal loophole that's created a very uneven playing field – one which the full-blown lawsuit from PRS is likely to address. ®

Bootnote

* It's actually "PRS for Music", after a Strategy Boutique rebrand a few years ago, but nobody ever calls it that.

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